Bank Guarantees
Bank Guarantees received under Collateral Transfer facilities may be used to secure lines of credit. Typically, a bank will have no objection to offering credit against Bank Guarantees received in this manner up to 100% of face value, less of course advance interest charges and bank fees. However, typical lending rates will be around 70% to 80% of face value. The total credit term can be for the duration of the Guarantee, usually 1 to 5 years, but of course will not exceed the expiry term of the Guarantee.
How are Bank Guarantees issued?
The Guarantees that are issued under these types of facilities are worded specifically to secure credit lines. Guarantees are issued under URDG protocols (currently URDG758) and are readily accepted by most main stream banks. They are referred to as a 'letter of Guarantee', 'credit facilities Guarantee' Correctly, they are called 'Demand Guarantees'. It is important to recognise that by using a Guarantee to secure a line of credit or loan, interest charges will apply in addition to the normal Contract Fee. From our experience, international bank lending rates for loans secured against such high-quality security tend to be in the region of 03,00% to 04,00% annually. This will of course differ in certain jurisdictions and currencies. We can facilitate lending in Swiss Francs, Euro and GB Sterling that are linked to either EURIBOR or LIBOR rates.
These facilities suit financial requirements for terms under 5 years or where returns are high, allowing higher expenditure on annual rates. The longer the term, the less suited Collateral Transfer facilities are and therefore we discourage terms in excess of 5 to 7 years, although they are achievable.
Bank Guarantees issued with the assistance of Novex Global Capital
Novex Global Capital is here to support our clients in securing credit against Guarantees of this nature, especially when their own banks are unable to provide lending options. We have established solid partnerships with banks and private equity groups that are eager to explore lending opportunities in this field. However, it is important to mention that there may be additional fees associated with utilizing our services to obtain credit lines. Furthermore, Novex Global Capital is well-equipped to assist our valued clients in establishing banking and lending facilities by directly introducing them to suitable banks.
Need advice from an expert?
We welcome you to reach out to us if you have any questions or if you would like to inquire about our services. Our team is here to assist you and provide you with the information you need. Don't hesitate to contact us, as we are more than happy to help.